Indochina Chronicle 51-52; Sept.- Nov. 1976 "Underdevelopment in Cambodia"

Underdevelopment

in Cambodia

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MJjjl^ September -November 1976

Introduction

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Khieu Samphan's doctoral thesis,* completed in Paris in
1959, was tile first systematic application of Marxist economic
theory to the specific problems of Cambodia. As such, it
became a basic text for a whole generation of Cambodian
students in Paris during the 1960s. It was also widely studied
and discussed among the left in Phnom Penh. Foreshadowing
many of the policies that have been implemented in
Democratic Kampuchea, the thesis is important for its
influence on the leaders of the new government and for the
light it casts on why they have adopted their present policies.*

Khieu Samphan

Born July 27, 1931, Khieu Samphan grew up in Kompong
Cham as the son of a middle-ranking civil servant. In 1954 he
received a Cambodian government scholarship for post-
graduate study in France, where he became politically active.
Together with leng Sary and Hou Yuon, ha attended French
political meetings, became a supporter of the Vietnamese
revolutionary cause and traveled to international peace
meetings such as the 1955 Helsinki Peace Conference. Back in
Phnom Penh, Khieu Samphan founded the French-language
weekly, t'Observateur. Us defense of autarkic development and
economic and cultural nationalism brought the magazine into
conflict with the neo-colonial and neo-aristocratic Sihanouk
regime. L'Observateur was banned in 1960 and Khieu
Samphan sent to prison for a month.

After a period as a teacher at a school for talented students
from low-income families and as a contributor to a
Khmer-language newspaper, Khieu Samphan was elected to the
National Assembly in 1962. He served briefly in Sihanouk's
cabinet as Secretary of Commerce. Khieu Samphan and Hou
Yuon, then Secretary for Planning, were forced to resign in
June 1963. For Khieu Samphan, this experience confirmed
thai his anaiysis of Cambodia's situation was correct, but it
convinced him that his earlier hopes for reform were overly
optimistic. In the Sihanouk government, he confronted
directly the western-oriented elite which owed its existence to

* "Cambodia's Economy and Problems of I raJustrialization," forthcom-
ing in a complete translation by Laura Summers, who teaches in the
Department of Politics of the Uniuersity of Lancaster in Lancaster,
England, This issue of the Indochina Chronicle, based on her translation
in progress, was edited by Martha Winnacker, Lowell Finley and
Candace Falk, We would like to express our thanks to Ms. Summers for
background information which has been incorporated into this
introduction.

* For a detailed study of the new government's policies, see Indochina
Chronicle No. 47, "Cambodia: The Politics of Food,"

Cambodia's position in tlie world trade system. At the same
time, the conditions he had analyzed in his thesis grew steadily
worse, making the need for change more acute.

Out of the cabinet, Khieu Samphan made a point of
familiarizing himself with peasant problems in order to defend
their interests. In 1966 he won one of the largest
parliamentary majorities in the country, although Sihanouk
publicly opposed his reelection. But that election brotight a
conservative majority, which chose Lt. Gen. Lon Nol as
premier. In a draconian effort to improve the faltering
economy, Lon Nol's government used the army to force
peasants to sell rice to the government at a price lower than
the cost of production, sparking a rebellion in Battambang
province early in 1967, When the army struck back, peasants
burned government buildings and fled into the bush with their
families. In Phnom Penh, Khieu Samphan and other leftist
deputies organized a demonstration calling for the resignation
of the Lon Nol government and withdrawal of troops from
Battambang. Soon afterward, Sihanouk named Khieu and four
other deputies as instigators of the rebellion. Khieu Samphan,
Hou Yuon and Hu Nim disappeared from Phnom Penh.

Underground, the three deputies worked to develop armed
struggle against Sihanouk's government, which they saw as
increasingly dominated by right-wing urban commercial
interests. By the beginning of 1969, the "Khmers Rouges," as
Sihanouk called them, controlled large areas in northern and
southwestern Cambodia. Threatened by the revolutionary
movement and envious of American support for the Saigon
regime, Phnom Penh's commercial and parliamentary elites
conspired to overthrow Sihanouk and secure American
support against the revolutionaries. In the spring of 1970 the
U.S. dutifully entered Cambodia six weeks after Sihanouk was
overthrown.

Khieu Samphan and other revolutionaries immediately
rallied to Sihanouk's support. Viewing him as a true nationalist
because of his consistent anti-U.S. and anti-imperialist
positions, they objected only that he had never transformed
his speeches into concrete development policies. Though the
prince's support was valuable to the revolution, the most
significant factor in the post-coup growth of the revolution
was the support and mobilization of Khmer people in all walks
of life.

Khieu Samphan's qualifications in economics, education
and political leadership, plus his experience in the
underground, made him a logical choice, first as Defense
Minister during the resistance struggle, and later as First
Deputy Premier and then President of the new Democratic
State of Kampuchea, He is generally regarded as the leading
figure in the new government. „

IIMDOCHINACHROWICLE

A cabinet meeting in the jungle, Khieu Samphan is second from left. NUFK photo.

The Thesis

The analysis centers around the idea that underdevelop-
ment is caused by colonial exploitation, which distorts the
colony's economy so badiy that it cannot develop. This theory
of underdevelopment has been carried further by other Third
World scholars, many of whom also studied in Paris during the
1950s and 1960s.

In a recently published study,* African scholar Samir
Amin, w/ho studied with Khieu Samphan in Paris, explains why
underdevelopment and mass poverty occur, Amin's thesis
distinguishes between "central" and "peripheral" economies,
which develop along entirely different paths. The primary
"motors" for the central economies— the U.S., Western Europe
and Japan-are the production of capital goods (machinery
and raw materials used in production) and that of goods for
mass consumption. Since industries producing for mass
consumption cannot function uniess there is a market for their
goods, the system as a whole must keep wages high enough to
allow workers to consume. This accounts for the affluence of
the "first world." Third world economies, however, have been
integrated into the world economy chiefly to supply cheap
labor for foreign capital. The growth sectors of their
economies produce goods for export and for luxury
consumption by small elites' at home. Goods for mass
consumption are produced by subsistence farmers and
impoverished small craftspeople. Since there is little capitalist
production for a mass market, there is no requirement that
wages be kept above minimum survival levels. As long as such
economies remain part of the world economy dominated by
the central states, this pattern of growth will continue,
perpetuating and even deepening inequality and poverty. The
cycle can be broken only by withdrawing from the world

■ For a more detailed presentation of Amin's theory, see box on page
18 .

economy and restructuring the local economy on a
self-centered basis. After this restructuring is accomplished,
the country may be able to reenter the world economy— but
on its own terms. Such a withdrawal and restructuring is
unlikely without a revolutionary upheaval, as the system has
created a small but powerful elite committed to its
continuation.

Khieu Samphan applies this theory to Cambodia, although
its concepts were not completely formulated at the time he
wrote.

The thesis is arranged in two parts. An abridged version of
Part I, "The Economy in Cambodia," is presented here. In
Chapter I, Khieu Samphan describes the structure of the
Cambodian economy in the 1950s and analyzes the way in
which it had developed under nearly a century of French
colonial control. He shows that the structure of the economy
is largely pre-capitalist, with a large stagnating semi-feudal
agricultural sector and a small, weak industrial sector. He goes
on to argue that the continued existence of this structure is
the direct result of French intervention in the economy before
Cambodia had developed the essential elements of a capitalist
system. As a result, Cambodia could not develop along the
course earlier followed by France and other western capitalist
countries, and it became instead an appendage of the
dominant French and international capitalist economies.
Khieu Samphan sees the roie of the United States, which was
expanding rapidly at the time of his writing, as essentially
identical to that of the French.

In Chapter II, Khieu Samphan shows that foreign
investments are heavily concentrated in export production (56
per cent) and activities that support the export sector (20 per
cent). He attributes this partially to the earlier destruction of
Cambodia's handicraft industries. This had undermined the
buying power of the mass of Cambodians and left no internal
market to attract investment in production for internal
consumption. As a result, export agriculture, intermediary
commerce and luxury production for the small group of
Cambodians benefitting from the import-export trade
developed. Rather than contribute to the even development of

September-November 1976

L^l_

the Cambodian economy, this kind of development makes it
more difficult for the country to develop a balanced system.

In Chapter III, he describes Cambodia's chronic foreign
account deficit— the country's pattern of spending more each
year for imports than it earns for its exports. The underlying
cause of the problem, he concludes, is the tendency of the
prices of goods from developed countries to rise faster than
those of underdeveloped countries like Cambodia while
Cambodia's import needs increase and those of the developed
countries decrease.

Both chapters II and Ill-deleted here— are further arguments

for the theme Khieu Samphan has developed in Chapter I:
Cambodia's backwardness stems from its integration into the
international capitalist system as a dependent, marginal
element. He argues that increased trade within the structure of
the world markets dominated by the large capitalist countries,
and the aid that sometimes goes with it, will never help
Cambodia out of its underdevelopment. It is precisely because
of its integration into this international system that Cambodia
is backward. This situation meets the requirements of the
dominant, developed countries, but not those of most
Cambodians. The solution he offers is simple and direct:
Cambodia must withdraw from the "entanglements of
integration" in order to engage in autonomous development.

Part II consists of three chapters on "problems of
industrialization," in which Khieu Samphan outlines a
program for reorganizing Cambodia's relations with the
outside world. He argues that a combination of fiscal and
monetary measures can make foreign trade yield a profit
which can be used for development. This program calls for
restructuring the tax system to reduce taxation of the poor
while increasing the tax on corporate earnings and imposing
stiff levies on imported luxury goods. And Khieu Samphan
calls for nationalization of foreign trade in primary export
commodities (rice, corn and rubber). This would cut private
speculators and banks out of the foreign money market and
give the state control over the money supply.

After a brief history of the origins of the Indochinese
piastres and the Cambodian riei— which includes much
damning information on the central role of the French-
controlled Bank of Indochina in the development of the
colony's economy, he suggests strict control of all foreign
exchange by the state rather than foreign banks. He also calls
for the use of import controls to restrict consumer goods
imports and increase capital goods imports. In a long section
on the national budget, he suggests austerity in the use of
personnel, proposing that many civil servants could be
transferred to state-run industries. To complement this control
of foreign trade, Khieu Samphan calls for state industries
working in conjunction with state supported rural producer
and consumer cooperatives.

Reviving rural industry, however, calls for some political
action, in the countryside, and he points out that these
economic reforms are fundamentally political. Although in his
view, the urban industrial structure can be reorganized by
fiscal and monetary reforms, the pre-capitalist agricultural
sector can be reformed only it the power of large landowners
and usurers is curbed. Hence, Khieu Samphan advocates
reforms in the rent structure and assurances to peasants that
the government would support them. Landlords must be
required to invest in local industries, while state-supported
cooperatives should give peasants access to credit and low-cost
goods. With some equivocation, he says this can be done

without redistributing land, although he admits landlords and
usurers will have to be dealt with authoritatively.

Part II, which modifies considerably the force of Part I, was
made obsolete by history. In the 1960s Cambodia's worsening
economic situation and Khieu Samphan's experience in
government led him to abandon any hope that non-revolution-
ary reform of Khmer society and economy was possible. As
the old order continued to oppose real change even in the face
of a deteriorating situation, he and others like him were left
fewer and fewer political options. After his brief term as
Secretary of Commerce, he confided to a friend that the only
way to reform the system was to overthrow it.

Sihanouk with members of the Oarrib'odicm
resistance. ^^ AKIJVM photo.

INDOCHINA CHRONICLE

Cambodia s Economy and Problems
of Industrialization

Preface

As its title indicates, this essay is concerned with
"Cambodia's economy and problems of industrialization." We
will not conceal the danger involved in addressing such a vast
topic in any way especially when multiple difficulties
attaching to insufficient historical and statistical documents
are compounded by lack of personal experience and practice.
Still, in order to determine the prospects for economic
development in our country, it is absolutely essential to
attempt to grasp the linkages and interdependence of differing
components of the development process affecting social life.
Accordingly, we will endeavor to examine those characteristics
which seem most critical.

This work will be divided into two parts. In the first, we
will attempt to demonstrate the objective necessity of
industrialization and autonomous development by studying
Cambodia's contemporary economic structure, the mechanism
underlying this structure and its influence on the rhythm of
ensuing economic development. In the second part, we will
evaluate some problems of industrialization properly speaking:
In particular, we will try to determine how structural reform
can be effected to ensure a solid base for industrialization and
what the prerequisites of such reform are . . ,

Paris, May 1959

Contemporary Economic '
Structure ' .; -

... A. AGRICULTURE .

1. Vast precapitalist sector , = ".I

Approximately 5 million people live on Cambodia's
territory of 182,000 square kilometers {69,800 square miles).
The active population numbers about 2 million people, and of
these, about 85% are engaged in agriculture where their
productive energies are constrained by primitive means: a few
draught animals per village; wooden ploughs; and the labor
power of isolated individuals subject to unruly forces such as

By Khieu Satnphan
Tnansiaiion by Launa Summens

drought, flood and disease. Thus, agriculture remains a
basically family activity.

An important distinction must nevertheless be made
between family undertakings devoted to rice cultivation in the
internal plains and those devoted to chamcar cultivation along
the river banks.* Both these forms of -activity invariably
qualify as family enterprises as they employ only the manual
labor of the family— the cultivator, his wife and children.

in these two forms of cultivation, the cost of tools is only
one to two per cent of total operating expenses. The small
family paddy lands, however, are more backward than the
small family river bank chamcar. Being essentially oriented
towards direct consumption, they resemble the type of family
agriculture practiced in medieval Europe while the small,
family chamcar are market oriented. In principle, these small,
commercial enterprises might provide a base for genuine
capitalist development (based on production utilizing capital
and wage-labor). Until now, the river bank region is the only

* Chamcar is Khmer for "garden." Cambodians use the term to denote
any cultivated area that is not a rice paddy or in specific reference to
garden farming. The author's reference to the river bank region shows
he Is using the term in this latter sense.— Tr.

September-November 1976

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INDOCHINA CHRONICLE

area where we encounter evolved elements composing a sort of
rural bourgeoisie. But in the absence of national industries,
nipped in the bud by competition from foreign imports,
development of commercial and capitalist production in these
parts is linked to the production of agricultural exports. The
selection of crops and the amount produced are subordinated
over the years to fluctuations in world prices for different
commodities.

The river bank and backwater region occupies only an area
of about 500,000 hectares* around the branches of the "x"
made by the intersection of the Mekong-Tonle Sap and Bassac
Rivers at Phnom Penh. The fragile, small merchant, capitalist
mode of production there appears unable to extend itself
beyond the banks. Roughly 1,500,000 hectares of rice paddy,
three quarters of all land cultivated in Cambodia, are worked
under a feudal mode of production. The peasant family grows
rice primarily to pay land rents and debts; what is left over is
consumed directly with no thought of exchange or monetary
gain.

2. Capitalist Sector Attached to Large International Units

There is, nonetheless, an island of capitalist agriculture
which cuts into this vast traditional base. This is the rubber
plantation sector. In contrast to family enterprise, rubber
plantations were set up by large capitalist firms making
extensive use of capital and hired labor (about 17,000
workers). . . .

[Rubber production in Cambodia is wholly controlled by
five companies, each of which belongs to a large "international
unit." The plantations occupy 32,200 hectares of land and
produce 27,500 tons of rubber, all of which is exported.]

* one hectare = 2.471 acres— Eds.

1. Industry is Weak and Unstable

The weakness of industry is shown by its small
contribution to gross national production.

Cambodia's statistical yearbook for 1937-1957 attributes
1.2 billion riels* (approximateiy $34.2 million) to industrial
production. This includes the "value added" by numerous
individual craftsmen dispersed throughout the country, family
noodle and soya sauce manufacturers, stone masons, jewelry
makers, joiners' shops, housewares shops, weavers, marble
sculptors, leather cutters, wooden shoemakers, bake shops',
etc.

Such workshops, almost exclusively employing family
labor, are more properly classified as artisan or craft industries,
as petty merchant and precapitalist forms. They should not be
considered "capitalist industries." Furthermore, as the artisan
sector clearly predominates in industry, its gross production
• )n 1956, 1 Cambodian riel = 10 francs. Thirty-five riels = $1 LI.S.-Eds,

could be estimated at 600 million riels, a sum which should be
subtracted from the figure above. Industrial production then
amounts to approximately 600 million riels, or only 8.6% of
the GNP (estimated at 7 billion riels).

The sugar refineries, cigarette factories, hand operated saw
mills, charcoal factories, kilns, brick and tile works, soap
factories, oil distilleries, fish sauce factories, silk weaving
shops, potteries, shoe and dyeing works, blanket factories and
cotton mills are all workshop type installations using little
fixed capital* such as those of 17th and 18th century Europe.
Similarly, the rice mills, distilleries, mechanized saw milts, ice
houses, soft drink factories, power plants, printers, black-
smiths and foundries, and mechanical repair shops resemble
factories of the 17th and 18th centuries more than they do
"modern" factories.

B. IIMDUSTRY

The basic characteristics of Khmer industry can be Ci&^ . >•
summarized as follows:

(1) it is weak and unstable;

(2) it is part of an ensemble whose center is located abroad
rather than part of an integrated national ensemble.

Artisans making aarts and baskets. AKI.

The Water and Electricity plants are steam generating
stations of low efficiency. In 1957, power emitted was 11,579
kilowatts requiring 9,350 kilowatts to produce. Benefiting
from a position of absolute monopoly (the two existing
companies being owned by the Bank of Indochina) and
concerned to secure immediate returns, these firms did not
invest large amounts of capital to install a hydro-electric
system or to improve the steam installations to furnish cheaper
electricity. They were satisfied with inefficient generators
promising quicker returns on investment, even though they
produced electricity at prohibitive cost. For this reason only
21.7 million kwh were consumed in 1955 out of a total
production of 27,5 million kwh while at the same time, all
national and foreign firms were obliged to acquire their own
generating sets to obtain the electrical energy they needed.
The major consumers of electricity produced in Cambodia are
the public services and a thin layer of the population.
Electricity remains a luxury commodity for the large majority.

* Fixed capital is tnachinerv, structures, and equipment of a relatively
permanent character,— Eds.

September-November 1976

Modern aenent faatory: post-tiberatton scene reflects the low level of technology
oharaateHstio of Cambodia in the tventieth century. AKI photo.

The blacksmiths and foundries could be expected to piay
an important role in the process of industrialization, but until
now they have been reduced to the cask of repairing ships and
steam engines. In addition to old naval yards, we must note
the presence of a French company previously established in
Haiphong which was relocated in Cambodia in 1955. This is
SOKREC* With its assembly line for the 2 CV (hp) citrogn,
installed at the end of 1957, SOKREC is slightly more than a
garage for the sale of imported automobiles, but only slightly.

Other major industries are rice mills and rice alcohol
distilleries. Other consumer goods are produced either by
artisans or by workshops of much less importance employing
very little capital [tobacco processing, weaving, notably). Most
of the population smokes hand rolled cigarettes. Manufactured
cigarettes and carbonated drinks are totally inaccessible to the
mass of peasants due to their extremely limited purchasing
power. For this reason, such products must be regarded as
"luxury" goods. Finally, the prosperity of the rice alcohol
distilleries stems from systematic poisoning of the population.

This examination of industrial structure permits us to point
to its insubstantial nature. Most of the workshops and
factories resemble those of the early Middle Ages. This
structure is, moreover, profoundly out of balance for it is not
oriented towards meeting the needs of the mass or towards
satisfying developmental needs of Khmer society.

2. Industry and Crafts Depend on a Foreign Center

Apart from the fact that Khmer industries and crafts are
weak and unbalanced, they do not constitute an integrated,
autonomous national whole. Each separate component is

rather more a part of an ensemble centered abroad. Thu<:,
industrial development is totally dependent upon outside
circumstances over which Khmer society has very little
control. This is not a matter of interdependence of discrete
economic units but clearly and certainly a case of unilateral
dependence of Khmer components upon the ensemble made
up of industries from advanced capitalist countries. This
dependence is demonstrated by the fact that:

(1) Major enterprises of a capitalist type are owned
directly by "large international units" with foreign
headquarters.

(2) Industry and crafts are totally dependent upon foreign
supplies of primary and semi -processed materials.

Let us examine these two points in turn.

(1) Major capitalist enterprises directly owned by "large
international units" with foreign headquarters.

We have already considered the situation of the rubber
plantations. For other industrial enterprises, the Bank of
Indochina predominates. It owned both the water and
electricity companies until their plants were ceded to the
Cambodian government at the beginning of 1958, The Bank
also controls Distilleries de I'lndochine, which originally had a
total monopoly on the industrial production of rice alcohol. It
produced 7 million liters (100?''o pure alcohol) out of a total
Cambodian production of 9.6 million liters. After it lost its
monopoly, it maintained this market position in spite of
serious competition from the large American firm, "Green
.Spot."*

'SOKREC is the acronym for Societe de Constructions, Representa-
tions ET Etudes du Cambodge. SOKREC was based in Phnom Penh with
naval vacds in both Phnom Penh and Sihanoul<uille. I[ specialijed in
industrial repair and assembly. Among other installations, ii assembled
the water purification plant in Chamcar Mon, military fuel depots and
the television tower fof Radiodif fusion Natiooate Khmere.

* The Societe Francaise das Distilleries dE I'lndochine was established
by the colonial regirne in 1902 as a means to regulate the sale and
production of alcohol to obtain government revenue. Local industries
produced for a thriving underground market. After 1933, the Societe
Francaise lost its official tnonopoly hut held its market position
because of superior technology and commercial organijtation. Green
Spot was established in Cambodia after intiependence.--Tft..

INDOCHINA CHRONICLE

2, Industry and crafts are totally dependent upon foreign
supplies of primary and semi -processed materials.

Industry (factories and mills} and crafts experience only an
incomplete cycle of development precluding all possibilities of
economic independence. The breweries and ice houses, for
example, import sodium bicarbonate, sodium citrates, phos-
phoric acid, citric acid, caustic soda, orange concentrate, oil of
laurel, blue dyes, orange coloring, pins and nails of diverse
sizes, not to mention fuels, lubricants and spare parts. The
only local raw material these "transformation industries"
process is water from the Mekong.

All other examples are equally striking. The components of
industry are more a part of a foreign whole rather than a
national who!e. Local enterprises are welded to industries in
advanced capitalist countries and totally ignore the rest of the
national economy: the cigarette mills process foreign tobacco,
the soap factories use foreign copra, and both completely
ignore "indigent" tobacco and copra. Thus, industrial activities
issuing from international integration of the economy are
more accurately thought of as extensions of the industries of
advanced capitalist countries while agriculture vegetates under
the weight of a profoundly precapitalist structure.

C. NATIONAL IIMCOME

On the basis of this overview, we can say that Cambodia's
economy is agricultural and backward. The retarded character
of this structure is shown by Cambodia's low national income.

According to official statistics, the net national product
was 12 billion rials in 1956, the equivalent of 120 billion

Champagne^ etc.

In order to have an idea of the disequilibriating impact
of consumer demands from [the] rich strata here is [an]
analysis of the import structure for Indochina. It is valid for
Cambodia in isolation as confirmed by external trade
statistics.

a) Products imported for "Europeans," landlords,
compradores, high civil servants: preserves, -flour, fruit,
candies, perfumes, cosmetics, spirits [champagne, cognac,
whiskey, etc. . . .), glassware, procelain, silk, electric lamps,
automobiles, furniture, raincoats, cigarettes in packets and
boxes, cigars, hats, concentrated milk, chocolate, fish and
shell fish, birds nests, onions, shallots, fresh and dried
vegetables, raisins, starches, fresh and preserved fruits, shark
fins, gasoline . . .

These imports, consumed by less than 10 percent of the
total population, make up 49 percent of the value of all
imports.

b) Products consumed by the mass, 90 percent of the
population: cotton in raW, fibre or woven form; petrol,
tools, fireworks, incense sticks, candles, household articles,
betel nuts, various condiments.

These imports represent four percent of all imports.

Khieu Samphan, Chapter 3

francs {£343 million) at present official exchange rates. This
amounts to 24,000 francs ($68) per capita.

In our judgment, the figure of 12 billion riets is
contentious. In point of fact, the total national product is
quite a bit less. Indeed, the calculation of the national product
mcluded the "value added" by administration, defence,
commerciB and the banking sector. It seems clear, however,
that these branches of activity add no value to the society
from the perspective of the economy as a whole. They simply
profit from a transfer of value issuing from other productive
activities within society (agriculture, crafts, small industry).
And the transfer of produce within society does not enlarge
the total value of production obtained by the society in any
way. The distinction made by the Scottish economist Adam
Smith between productive and unproductive work deserves to
be carefully considered here.* This is far from saying, for
example, that a civil servant or a soldier would be useless to
society. However, the greater the reduction in numbers of
individuals concerned with general social organization, the
greater the number who can contribute to production and the
faster the enrichment of the nation.

If this distinction between productive and unproductive
activity is correct, a distinction made from the perspective of

Moreover, if the cost of maintaining a soldier represents a
necessary expense, as it certainly does in Cambodia's case,
such expenditures remain nonetheless unproductive. The
situation is clear: the struggle for peace in South East Asia and
against military pacts figures in the framework of our
economic development efforts.* Finally, the "unproductive"
character of commerce will emerge once we have studied the
mechanism which underlay and underlies its overdevelopment.

Fortune-teller plies his trade.

' Adam Smith, The Weatlh of Nations, Guillaumien French translation,
1843.

' This IS an indirect but specific reference to aggressive efforts bv
members of the South East Asia Treaty Organiralion (SEATOl 10 bent)
Cambodia's foreign policy to "free world" vvili. In the months
immed lately preceding completion of this essay. SEATO povuars
sponsored a clandestine military movement and a major coup attempt
against Prince Sihanouk. Tr.

September-November 1976

the economy as a whole without any pejorative intent, it
follows that we must deduct the sum of about 5 billion riels
entered into account as "value added" by administration,
defense, trade, and the banking sector. The net national
product thus becomes 7 billion riels ($20 million) (12 ■ 5 = 7
billion riels).

This figure more closely approximates reality in Khmer
economy. Income growth has no meaning unless it reflects
material growth. It seems to us that growth in productive
potential is the only valid criteria for measuring the degree of
development of an economy. We are of the opinion that
reasoning couched in purely monetary terms lacking reference
to "real" factors of production can only lead to disappoint-
ments.

Causes of Economic
Backwardness

From a strictly economic point of view, the effect of
French intervention in Cambodia from 1863 was to "open up"
the country to trade with France. According to the act of
January 1892, metropolitan (French) goods entered Indochina
without duty and Indochinese produce imported by the
metropole was exempt from duty. As a general rule and in
accordance with terms of the same act, foreign goods entering
Indochina paid the same duty as they would have paid for
entry into France. Thus, the customs device forbade entry of
merchandise from other capitalist countries but established
free trade between France and Indochina within which
Cambodia was dissolved.

The present economic structure of Cambodia issues from
this free and unfettered contact between a basically
precapitalist Khmer economy and a more advanced, French
capitalist economy.

When two capitalist countries come into contact (sup-
pression of protective tariffs and import quotas, free transfer
of capital and earnings), they are able to play symmetrically
active roles as long as they are at about the same level of
economic development. The two economies interpenetrate in a
gradual way until they form a perfectly integrated whole. It
goes without saying that this process of reciprocal integration
isn't accomplished without conflict or crisis, but at the end of
the struggle only small and medium sized business, the
marginal businesses of the two countries, will be eliminated.
The large industries of the two countries will emerge in a
stronger position and will profit from a larger "economic
space" in which they can deploy capital and labor as they
desire.

The process is profoundly different in relations between
capitalist and precapitalist economies if relations are estab-
lished on the principle of freedom of commerce of the sort
developed in the mid-19th century between France and
Cambodia. The confrontation here is unequal. One of the
economies concerned is already more advanced and more
dynamic, propelled by exchange and search for profit. The
other is stationary, living essentially on the principle of
immediate gratification of needs and ignoring exchange and
profit. Contact does not break the precapitalist character of

the laner, which becomes underdeveloped. In trade between
France and Cambodia, Cambodia was unable to play a role
symmetrical to diat of France, a developed capitalist country.
Only France played an active role, integrating its partner,
which was subjected to integration, into a foreign capitalism.
In this situation lies the essential reason for Cambodia's
present economic backwardness.

From 1955, Cambodia's international trade was enlarged to
include other advanced capitalist countries, in particular the
United States of America. After two wars, the United States
enjoys unrivalled economic dominance in the Western world.
It took advantage of payment difficulties encountered by
Cambodia as well as the majority of underdeveloped countries,
to build up trade on the old principle of free trade. Indeed,
American economic aid embodies this principle as it is mostly
commercial aid, and contains, in rudimentary form, the means
of integrating Khmer economy into the new dominant
economy, a process which can only strengthen precapitalist
structure in the national economy.

We mentioned relations premised on free trade and
emphasize this premise because contact with advanced
capitalist economies need not necessarily result in dis-
equilibrium. Under other circumstances which we will attempt
to define in the course of this essay, contact is, in contrast, not
only beneficial for Cambodia but for both parties.*

To begin, let us try to analyze more closely the mechanism
which gave rise to the present structure.

• This position on international contact was affirmed by the new
Kampuchean government at the recent Norv-Atigned Nations Summit
Conference in Sri Lanka.— Eds.

A. CAMBODIA'S ECONOMIC STRUCTURE
IN THE MID-19th CENTURY

An in-depth study of Khmer economy prior to its contact
with France would give us a better understanding of
characteristic aspects of contemporary Cambodian economics.
In the absence of such a study, we can only present a tentative
overview of principal traits of the present structure.

Cambodia's economy in the nineteenth century was still a
precapitalist agricultural economy: Agriculture is the principal
occupation and resource, the primacy of which is reflected in
court rituals and state organization as much as in literature and
popular traditions.

This agriculture rested upon agrarian organization approxi-
mating the feudal form. The feudal character of rural Khmer
life had specific nuances linked perhaps to technical conditions
of rice cultivation and most certainly to historical and
geographical conditions of the country. There were no large
single owner agricultural domaines; only small village concerns.
But the peasant mass was imprisoned within the village or
srok* under a feudal form of authority, that of the sethey,* a
landowning and mandarinal oligarchy. Even though the king
was in theory exclusive master of the soil and its beings, the
earth was concentrated in the hands of sethey, feudal lords

• The srok is a Kiimer administrative unit comparable to the Western
county or province.-Tr. i - i

* Sethey denotes "the enlightened ones."-Tr.

m

INDOCHINA CHRONICLE

and mandarins even more powerful than ministers. The capital
was after all distant with respect to the means of
transportation of this period.

At the beginning of his reign the king entrusted
management of his property to his people, by proclaiming:
Water, earth, forest and mountains in the provirices of the
Kingdom cannot be taken by us. I leave them to the religious
communities, to all people and to all animals in order that
they may there find their subsistence with integrity. ' In fact,
the large class of mandarins and notables that the king could
not satisfy divided the (and up for themselves. This land was
then cultivated by peasants reduced to servitude and slavery.
Could it be otherwise when, as Paul Collard noted: 'The
tyrannical infiuence of mandarins has penetrated the heart of
this country so profoundly; it is so well inlaid, that the peasant
is nothing more than an abstract being.'"

Thus, rural Khmer life surely presents a feudal character.
Under this feudal shroud, an active handicrafts sector emerges.
Although artisan exploitation and transformation of subsoil
wealth seems to be primarily the work of the king and feudal
lords through use of their slaves or pols, free craftsmen are
actively engaged in silk, cotton, rattan, palm sugar, wood,
ivory, and leather. . . .

[In his 1874 dissertation, Le Cambodge Economique, Pierre
Dreyfus noted a variety of flourishing crafts, some of which
were sold over considerable distances. However, he also
reported that the silk industry was beginning to decline due to
competition from cheaper Chinese silks. In his account, he
labels the Cambodians "apathetic."]

. . . The apathy of Cambodians is frequently mooted and
freely attributed to a particular trait of the race. But would it
not be more appropriate to locate the cause of this "apathy"
in the economic and social structure of the time, more
precisely in this "tyrannical influence" of mandarins and
feudal lords which diminished people to nothing more than
"abstract beings"? Was the Cambodian who lived under the
conditions of feudal society more apathetic than the French
serf in the Middle Ages? It seems not. It was the economic and
social structure which forbade Khmer peasants and craftsmen
from developing their full potential.

It must not be forgotten that Khmer industry in the
mid- 19th century evolved under conditions fundamentally
similar to those experienced by French craftsmen throughout
the Middle Ages. The transformation of an essentially "static"
subsistence economy into a more dynamic mercantile
economy had barely commenced. In this respect, Cambodia's
economy was still lagging behind India's where manufactured
products were already appearing. It also lagged behind its
neighbor, Viet Nam, where handicrafts had already detached
themselves from agriculture and were centered in specialized
villages or "village assemblies" where each village as a unit
executed all necessary operations in one area of production.
But [in Cambodia! the existence of some specialized villages
(silk, cotton weaving and pottery villages); the appearance at
this time of centers of exchange in kampong* (floating or river

^

Photo by Steve Cagan,

bank}; the fact that some products, especially pottery, were
already the object of extended commerce; all demonstrates
that the social division of labor was already relatively
advanced, and that merchant economy had already made
certain progress. Ancient handicrafts were already technically
advanced. Here is an impression of the situation recorded by
one of the first French administrators:

And yet, when one sees the wonders of solidity
executed by the Cambodians for carts so light and elegant,
the vigorous hardiness of their pagoda frames, the finish of
all the instruments they employ, and the taste with which
they are made, curved and graciously sculpted, the science
of combining design and color employed in the weaving of
their marvellous silk sampot, one cannot help but believe in

the pflssibility of rapid industrial development by this race.

*

[However] it is impossible to achieve further industrial
development unless the precapitalist economy is assisted in the
process of disaggregating* feudal society and in giving birth to
national capitalism.

Contact with France did not accelerate the expansion of
this national capitalism. Rather, the integration of the
transitional economy into an international market dominated
by the most advanced countries sidetracked development onto
its contemporary semi-colonial and semi-feudal path.

Let us attempt a closer examination of this mechanism of
structural transformation.

' Adhemard Leclefc, Coties Cambodgiens. "Samte regie el sacre royal
du roi Sauryapearn," p. A7. ,■

• Paul Collard. Le Cambodge et les Cambodgiem.
' Kamponj is Khmer for river town or port.

■ De Coulgean, French Vice Consul, "Report on Cambodra," Bulletin
economique de I'Indochine, 1902. p, 420.

' The term "disaggregating" here appears to mean the "seiiar.=i!ioii of
various sectors of the feudal economv from their place in an historic,
organic whole, so that they can be reintegrated into a new
national-capitalist struciure. -Eds.

September-Novennber 1976

n

B. STRUCTURAL IMPACT OF CONTACT WITH
FRANCE FROM THE MID-NINETEENTH
CENTURY

At the time of the Renaissance, the development of
capitalism in European countries was a process evolving within
the manor economy itself and traversing two stages:

( T ) Transformation of subsistence economy into simple
merchant economy. This stage was completed in the
course of the Middle Ages when new technological
innovations enabling growth in productivity required
separation of agriculture and craft functions. Craftsmen
left agriculture in order to specialize in the production
of household goods and farm tools. The cultivator
ceased making these goods and tools for himself. There
was now a market for selling and purchasing goods
which emerged from this initial division of labor within
the society. It stimulated currents of exchange between
agrarian and craft sectors, and later, within agrarian and
manufacturing sectors themselves.
(2) Transformation of simple merchant economy into
capitalist economy. As the social division of labor and
the development of exchange progressed, competitive
relationships were established among individual pro-
ducers, each striving to sell at better prices and to buy
more cheaply. This resulted in the strengthening of
those who were strong and the ruin of others, which in
turn led to the transformation of independent
producers into salaried workers and the transformation
of a number of small establishments into manufacturing
enterprises.

Competition continually forced the first capitalists
to modernize their enterprises, to resort to larger and
more intensive use of capital. One enterprise in a single
sector deciding to bring new equipment into use was
sufficient to force its competitors into making
comparable investments lest they be out-distanced.
Thus, technology advanced rapidly along with produc-
tion.
Admittedly, things are not quite so schematic in historical
reality. First of all, the two processes evolve simultaneously in
part: the transformation of simple merchant circuits into
capitalist circuits accelerates the monetarization of sectors still
excluded from the exchange process. Next, the process of
transformation of a simple merchant economy into a capitalist
economy is accelerated by foreign exchanges; Merchant
"adventurers" become rich from the sale of spices and foreign
goods to big feudal lords, and this facilitates their initial
accumulation of formerly hoarded wealth. These prospering
merchants became manufacturers. But all these considerations
should not obscure the essential, that is, the fact
that there was an initial division of labor within the society
and development of internal exchange.

The process observed in precapitalist economies subjected
to international integration is profoundly different.

We will see this in the course of examining the case of
Cambodia,

.^P^4fe-

1. Structural Impact of Foreign Trade

a. Decline of handicrafts. While indigenous capital invest-
ment and the creation of light industry to take over
production of goods previously furnished by craftsmen was
the basis of European capitalist development, the penetration
of foreign and French industrial products is the basis of
Cambodia's underdeveloped economy. French businessmen set
up shop and flooded the local market with manufactured
goods. The relative cheapness of these goods signaled the
decline of much of the national craft sector. Silk and cotton
weaving nearly disappeared completely because of competition
from French-manufactured rayon and cotton cloth. The
demise of weaving industries led by extension to a decline in
family dyeing enterprises.

Sugar-based industries faced competition from refineries
installed in Viet Nam by the company Baffineries de
rindochine. Local rice alcohol distilleries encountered the
same from Distilleries de I'lndochtne. Imported foodstuffs
having seized part of the market, craftsmen who processed
agricultural products subsisted only by meeting the needs of a
fraction of the population too poor to buy foreign
merchandise. The same thing happened to the tinware,
pottery, basket weaving and esparto* crafts. An important
part of their market within the rich and middle strata of the
population was cornered by similar, substitute products
manufactured more cheaply by foreign Industry.

Monsieur De Coutgean, whose impressions of Khmer
craftsmanship we have already cited, was astonished:

. . , and yet individually, ^e Cambodian is industrious and
* Esparto is a grass used to make cordage, shoes, and paper. -Eds.

12

INDOCHINA CHRONICLE

skillful; he can make everything he needs by way of tools
utensils, clothes and house . , . -.

and a little further on:

Thus, while the Khmer is a fine potter, an able woodcutter,
an admirable boat builder, a tasteful and adroit manual
worker, lacking neither courage nor patience, nor even a
certain entrepreneurial spirit, he has not, to date, been able
to bring about anything of industrial significance.

Wouldn't the reason for this apparent contradiction lie in the
direct and indirect competition of imported goods? In Europe,
entrepreneurial spirit emerged only with the birth of
capitalism. And capitalism, under effective protection from
customs barriers, required a long time to work its way through
medieval feudal society. .

In Cambodia, the merchant economy vvas still in its early
stages. It evolved slowly within the framework of feudal
society in the mid- 19th century. Handicrafts had already
attained a high technical levpl but were not yet separate from
agriculture. The introduction of. goods from more developed
foreign industries could only weaken and discourage craftsmen
from breaking down the intricate network of feudal relations
of production.

More recently, during the Second World War, a few craft
industries were able to emerge when forced autarky* reduced
foreign competition. These were mainly soap, cotton, blanket,
silk, palm sugar and paper crafts. The paper mills soon
disappeared as imports were resumed. Other enterprises were
also placed in jeopardy. In its report of 11 October 1956, the

* Autarky is national economy self-suHiciency and independence. -Eds.

Mining, Industry and Crafts Administration notes: "... our
industrial situation is all the more critical because of
uncertainty about the future," Referring to the Tan-y-Sine
sugar refinery set up during hard times caused by the war and
which now produces 700 tons of sugar [per year] , the same
report says: ". . . it could produce enough to cover the needs
of the country if sugar imports were prohibited." In point of
fact, this refinery incurred a loss of 174,172 riels ($4,976) in
1954 because of competition from imported sugar (2,086 tons
in 1954).

Competition from foreign industry or its commercial
"antennas" carries on. The crafts sector "lights up and fades
away." One must not, however, conclude that it will soon
disappear altogether. Actually, only some artisans succumb.
Others subsist by satisfying the needs of the impoverished
portion of the society whose precarious purchasing power
denies them access to foreign goods. Still other artisans survive
in the wake of large foreign industry and find themselves
responsible for service and repair work on goods manufactured
abroad. This is the case with all sorts of repair and
maintenance men who service such items as radio, automobile
and electrical equipment. Handicrafts and small industries thus
tend to become an appendage of large foreign industries. This
of course means increasing vulnerability of craftsmen to the
fluctuating of advanced capitalist economies. From that point
onwards, developmental prospects offered by foreign capital-
ism are tightly linked to the evolution of the international
situation.

As long as business is lively, handicrafts receive a share of
the profits, albeit modest, but sufficient to ensure a certain
level of activity and to improve it in new ways. While
"traditional craftsmen" continue to slide into secondary
occupations, part of the crafts sector can even attain industrial
scale by modernizing itself and enlarging its labor force.

If, in contrast, a recession comes along, the "push" towards
industry stops; small capitalist industries will be obliged to
reduce their activity and will tend to draw back into artisan
ranks. This particular sort of "reinforcement" does not,
however, amount to any quantitative enlargement of handi-
crafts because it is more than made up for by the simultaneous
decline and bankruptcy of many existing businesses.

b. Reirtforcement of precapitalist structure in the country-
side. The decline of handicrafts, a part of which quite
paradoxically owes its survival only to the extreme impoverish-
ment of a significant portion of the population, signals a
retreat to subsistence economy. The enfeebled crafts industry
is no longer capable of moving out of the agricultural sector
and persists only under the title of "secondary activities" of
peasants. The process of the disintegration of feudal structure
is thus hatted.

In advanced capitalist countries, the "industrial revolution"
was accompanied by profound upheaval in agrarian structure.
In certain countries, notably France, the lordly domain was
destroyed by revolutionary confiscation and division of feudal
properties. The peasant became the exclusive force in
agriculture, transforming himself into a capitalist farmer.
Feudal landlords in other countries (England, Germany and
Japan) under the influence of strong exchange currents from
new, emerging industry "reorganized" their property, replac-
ing ancient and backward methods of cultivation (sharecrop-
ping, renting) with capitalist methods of cultivation (capital
investment and use of salaried workers). This brought an

September-Nbvember 1976

13

Cambodia's Major Industries and

Nature of Industry

PRIMARY MATERIALS
Local Imported AnnuaHy

I. HEAVY INDUSTRY

Electrical Plants

Number; 10
Annual Production:
28,400,000 kwh

Ironworks, Foundries
S.O.K.R.E.C,

Carbonated Drink
Factories

Bicycle Parts
Factory

Number: 1
Production:
36,000 parts

Rice Mills

Number: 33

Production:
305.000 tons of
rice and bristle

None

None

Water

None

Paddy

a) spare parts; motor, metallurgic products (copper, iron, brass),
cables, tubing, castings, water meter

b) electrical fittings ^

c) chemicals: aluminum sulfate and others

d) miscellanous: insulated, supple and plain wiring; 107,530 tons of
gaz oil and diesel fuel; 100,033 tons of grease

a) semi-proc^sed goods:

hoop iron 450,000 t.

iron sections

1 ,200 1.

rod iron

250 1.

black sheet metal

200 t.

ordinary sheet metal

loot.

aluminum

5t.

window blinds

120 roll

bent and straight tubing

loot.

b)

spare parts

c)

fuels: gaz-oil. diesel oil

d)

lubricant

a) semi-processed goods:

sodium bicarbonate, sodium citrate, phosphoric acid, citric acid,
caustic soda, orange concentrate, various oils: essence of sarsapa-
rilla, of African kola, peppermint concentrate, oil of laurel, blue
and orange colorings, caramel . . .

b) supplies:

hooks, corks, horns, clamps, etching needles of different sizes
d) lubricants

a)

b)

d)

semi-processed products:

plywood 15 1.

steel tubing 15 t.

duralumin tubing 1 5 1.

parts:

bolts and nuts, soldering rods, pressure gauges

fuels: gaz-oil, diesel oil, oil

miscellaneous: grease

a) parts: conveyor belts and parts, rubber belt slips

b) chemical products: emery powder, magnesium cement, mag-
nesium chloride

c) ftje/s; gaz-oil, diesel oil . ^ « ..

d) lubricant: oil ^ • '

J
X

Source: Report o< the Mining Industry and Handicrafts Administratior*, Phnom Penh. 11 October 1956. (Partial listing. I

14

INDOCHINA CHRONICLE

their Annvoi import Needs

Nature of Industry

PRIMARY MATERIALS

Local Imported Annually

/

Mechanized Textile
Plants

Number: 5
Tan Pa & Sons
Seng Thai
Tran I
Chip Tong
Borv Ky

68 looms
60 looms
26 looms
24 looms
10 looms

Annual Production:
1.173,120 meters

l(. LIGHT INDUSTRY

Mechanized Weaving
Ateliers

Number: Shaving
67 wooden looms

Annual Production:
453,360 meters

Paper Mills

Number: 1
Production:

4,800 reams

(packing papers, toilet

tissues, boxes)

Glue Factory

Number: 1
Production: 60 t.

8offte & Flask
Factories

Number: 1
Production:
625,000 items

Cigarette Factories

Number: 3

Production:

1 ,376,800,000 cigarettes,
60,000 packets of tobacco

None

None

Corn husks, paperwaste,
old sacks, kapok fruit
husks

Offal of pigs, cattle, fire-
wood, paddy husks

Broken glass, bottle frag-
ments, firewood

8) parts: spare parts for looms and generators

b) semi-processed goods: raw silk (93,850 kg.), glue, tracing paper,

jacquard frame, bridging thread, marking string
cl fuels: gaz-oil, diesel oil
d) lubricant: oil, grease

a) semi-processed goods: 36.350 kg raw silk

sodium

calcium chloride
ascedic acid
chrome alum

calcium carbonate
drying plates

40 t.
40 1.
40 1.
50 t.

bits of glass

fireproof clay for firing and molding

tubing, ventilators, bellows

local tobacco (556 1.),
honey, rice flour starch,
wood

foreign tobacco

1,300 1.

labels, sulfite papers, aluminum foil, cellophane, cartons, Kraft
paper, bisulfite paper, gummed Kraft bands, glycerin, copper
powder

Equipmen t and ^are parts:

boilers, sprayer, insecticide, ferging' humidifer, shredder, cigar-
ette packing machine, sealer and cellophane wrapper.

* Unknown to trsrslalor. -Tr.

September-November 1976

15

I- J

■fi

increase In productivity and a reduction in the number of
peasants per hectare of cultivated land.

In the same way, according to Colin Oark, the agricultural
population in the United States increased from 4.97 million
workers in 1850 to only 10.5 million in 1935, while land
under cultivation increased at a faster rate. In Great Britain,
the population employed in agriculture declined from 2.06
million in 1861 to 886,000 in 1930; in France, from 6.3
million in 1860-09 to 5.5 million in 1930. In these two
countries, the area under cultivation can be considered stable
throughout the period cited. At the same time, agricultural
production in these countries, estimated in international units,
rose from 298 to 669 for the United States; from 581 to 827
for Great Britain; and from 435 to 500 for France.

In Cambodia, as in other underdeveloped countries, it
seems the inverse phenomenon took place. Information is
lacking on population movements as well as on land under
cultivation, because available annual statistics were in fact only
estimates made by central authorities from the number of land
registrations or from frequently imprecise declarations by local
authorities. Nevertheless, as the method of estimation was
constant over the years, it is reasonable to assume that the
resulting time series might reflect developments in population
and land cultivation. Thus in 1900-1913, the area given over to
rice paddies was estimated at 620,000 hectares.' Taking into
account areas seeded in cotton, corn, tobacco, pepper, etc.,
which Cambodia was already exporting in large quantities, the
total land under cultivation might reasonably be estimated at
650,000 hectares, tn 1950-51, the area under cultivation
reached 1,320,000 hectares, an increase of 103 percent."

What about changes in rural population? With no precise
statistics, we can make inferences about changes in the

• H. Brunim, Essai d'atlas statistiQue de t'intiochine francaise, 1914.

• Bulletin de la Banque Natiansle du Cambodge. No. 3, 1955.

agricultural population by looking at the exodus of rural
residents from the countryside. In 1900-1913, towns being
barely developed, we can estimate that approximately 95
percent of the total population of about 1.5 million people
lived in the countryside, giving 1.43 million rural residents (see
Brunier).

In 1951, the number of people living in the countryside
rose to about 3.54 million (87 percent of the population), a-
figure obtained by subtracting the population of the provincial
towns (529,127) from the total population (4.07 million).*
From 1900-13 to 1950, therefore, the agricultural population
increased by 149 percent. - r'

Cultivated Area
1913= 100
1950=203

Agrarian Population
1913= 100
1950 = 249

The increase in number of cultivators per hecatre of land is
partially concealed by the availability of easily cultivated land
in Cambodia. Nevertheless, this trend is discernible.

Moreover, each year when work in the rice paddies and
other fields is finished, a mass of impoverished and ruined
small producers is observed descending into town in order to
find jobs. Dock workers, taxi drivers, coolies for road and
bridge construction, porters and domestics are recruited from
this reservoir of casual labor. A developing industry capable of
assuring stable and remunerative employment could have
"fixed" this seasonal "excess" which shunts back and forth
between town and countryside. Life in the countryside is hard
for impoverished peasants, but towns offer only a mediocre
alternative. The majority of them are thus obliged to cling to
the land, divide family holdings into infinite pieces, submit to
heavy rents and other sorts of painful exploitation which serve
only to reinforce the monopolistic position of landlords.

* See Annuaire statistique du Cambodge, 1949- 1950- 1951.

76

INDOCHINA CHRONICLE

f

Is it precise to speak of a landlords' monopoly in
Cambodia? Are there any big landed estates there? The
generally accepted view tends to deny it. Justification for this
view is based on the fact that the Cambodian countryside is
dotted with small and medium-sized family holdings. But it
seems to us that the parcelling of land doesn't mean the
absence of large properties. In his dissertation. La paysannerie
du Cambodge,* Mr. Hou Yuon correctly pointed out that a
large property does not consist of a single rice paddy, field or
lot. As of 13 January 1950, he noted that 437,883 registered
property owners owned 3,168,920 lots. If the city of Phnom
Penh is excluded, 3,157,533 lots were held by 435,744
owners, i.e., 7.22 parcels per property owner. Large property
holdings must be defined not in absolute but in comparative
terms. The study conducted by Yves Henri in 1929 and 1930
in the five Cambodian provinces that contain more than half
of all the country's rice fields (Sway-Rieng, Prey-Veng,
Kandal, Kampong Cham and Battambang) reveals that very
small land owners (one hectare or less) are indeed numerous.
They represent 12.9 percent of all rice paddy owners in
Sway-Rieng, 18.5 percent in Battambang, 28.3 percent in
Prey-Veng. 48.6 percent in Kampong Cham, and 64.1 percent
in Kandal. They are even more numerous on the river banks:
81.1 percent in Kandal, 88 percent in Kampong Cham. The
large number of these smallholdings only strengthens the
economic position of large estates (10-50 hectares) in spite of
their small number. The 1929-30 crash and subsequent
economic development means only that this disparity will be
increased.

Historically speaking, although the "constitution de
propriete" (decreed by Governor Thompson in 1884) met
only with indifference and total neglect from the Cambodian
population, it did favor the consolidation and organization of
large holdings by elements of the old feudal landlords,
mandarins, and dignitaries who implemented the policy, after,
of course, settlers and large plantation businesses had taken
enormous chunks of land for themselves for rice cultivation
and rubber plantations. (European landowners held 139,759
hectares on 31 December 1951.)"

From all this, one must not however come to the
conclusion that big property enjoys absolute primacy in
Cambodia. Though it is very difficult, let us try to put the
structure of landholding into very approximate perspective.
According to the Annuaire statistique de I'tndochine. the
distribution of rice-paddy owners according to size of their
holding in Cambodia's three major rice-producing provinces—
Battambang, Prey-Vieng ^and Svwy Rveng-in 1930-31 was as
follows:

Property • Number of

Percent^e

.Category . Owners-

Less than 1 hi. 25,000

20.9

1-5 ha. 72.000

60.3.

5-10 ha. •. ., •^. 18,000

15.0 '

10-50 ha. , .v-jfij, ■• 4,400

7.3

50- 1 00 ha. . ... ; •C'.'^ ... 100

0.1-

— Sihanouk on Khmer Rouge — i

"Cambodia will become Communist, and it is only right
that it become Communist, because the revolution that the
Khmer Rouge have made in the liberated areas has
succeeded. I was convinced of this by seeing it with my
own eyes. The Khmer Rouge are serious people. They know
how to build up a country and they have done things that I
never succeeded in doing. . . .

"In the liberated areas, they no longer lack anything:
neither meat nor vegetables, fruit, rice, clothes. Despite the
war, rice production has doubled. When I was head of the
state, they produced a ton and a half per hectare. Now it is
two and a half tons per hectare. Or three. Products are good
and prices are low. . . . And when one sees such results, one
must admit that those who have obtained them have the
right to govern the country. ... It is quite right that I
should congratulate the Cambodian Communists and tell
them: You are fine people. You deserve to stay in power
forever and nobody should push you out. Not even
Sihanouk. Sihanouk should no longer rule instead of you
because he has not succeeded in doing what you have done.
He wanted to, he dreamed of doing it; but he was not able
to accomplish it. Besides, Sihanouk does not count. What
counts is Cambodia. So. even if one day you may throw
him out, he will think as he does now. Yes. because he is
bizarre. But he is not dishonest; and he is not a fool."

Prince Norodom Sihanouk, quoted in New York Times

Magazine, August 12, 1973

* Paris. 1955. Hou Yuon, 46, joined the R&sistance in 1967, and is
currently Minister of the Interior, . Cooperatives and Communal
Reform;-Eds.

' E urapean holdings included more than ono-tenth of the total
cultivated area. -Eds. ,.

Under Cambodian economic and social conditions, land-
owners with 7 to 10 hectares cannot work with family labor
alone; usually, they augment the family labor force with
salaried labor or rent off part of their land. In the context of
Khmer society, these are already rich peasants. The majority
of property owners with 10 to 50 hectares are able to extract
most of their livelihood from renting their lands without
having to cultivate anything for themselves. These are,
therefore, large landlords. A property of less than two hectares
is insufficient to meet the subsistence needs of an average
family of five people. The family is thus obliged to work on
the land of others either as tenants, sharecroppers or salaried
workers. They belong therefore in the category of small
landowners. A medium-sized property consists of about two to
seven hectares. . . .

[Thirty percent of the landholders own less than two
hectares, the subsistence minimum. The next 60 percent own
between two and seven hectares, and in most cases work the
land themselves without hired labor. This leaves the top 10
percent of the landowners in control of 40 percent of the land,
most of which is worked by sharecroppers, renters, or hired
laborers. In-kind rent varies from 25 to 60 percent of the
harvest. —See La cooperative agricole en Indochine. \

... Rent in Cambodia is consequently not a capitalist rent
which is levied on the surplus of the average profit of the
farmer, but a feudal, precapitalist rent issuing from a
monopoly of landownership and personal dependence of the

September-November 1976

17

peasant vis-a-vis the landlord, dependence most conspicuously
manifested by the persistence of rent in labor combined with
rent in kind and in money, by the practice of voluntary
corvees (labor days, community husking of paddy and rice
polishing), by traditional gift-giving and by debt service.

From this we can draw two conclusions:

(1) Commercialization of agriculture initiated by large
foreign monopolies did not come from a radical disruption of
the feudal mode of production. Impetus initially came from
two quarters; It issued from big landlords renting their land in
small lots. Prior to international integration of the economy,
landlords directly consumed their rent product which was paid
in kind. After integration, an opening for the export of the
rent product emerged. The big landlords sold produce to
export companies or to their intermediaries in order to buy
imported merchandise. Rent was more and more sought in the
form of money, to be sure. Accordingly, peasants were obliged
to put more and more merchandise on the market. They then

fall into the hands of all manner of commercial intermediaries,
usurers and other agents of commercial agriculture.

In this manner and by means of tax levies, rent and usury,
surplus rice has been extracted each year for export at the
expense of peasant consumption.

(2) The preservation or strengthening of feudal organiza-
tion in its most crucial aspects means that economic forces are
now embedded in a dense network of backward economic
relations. How does this affect the peasant mass? It is kept in a
state of perpetual moral prostration as a result of semi-
servitude, land rents and usury. Consequently, pro.gress in its
activities, knowledge and initiatives becomes very difficult. As
for landlords, rent and usurious interests are their best possible
investment. The use of fertilizers would bring no more than
50-60 percent return in a year. Loaning of money and renting
of land is therefore more profitable than refurbishing soils,
improving irrigation or drainage, or rational use of modern
agricultural equipment. Nothing prompts landlords to save or

Iheory of

In chapter three of the dissertation, deleted here because of
space requirements, Khieu Samphan refers to the 19B7
doctoral dissertation of his contemporary, Samir Am in,
entitled "The Structural Effects of International Integra-
tion on Pre-capitalist Economies." Amin, who was born in
Egypt, was also a student in Paris in the 7950s. He is now
director of the U.N. -sponsored African Institute of
Economic Development and Planning in Dakar, Senegal. He
is the author of Accumulation on a World Scale (Monthly
Review Press, 1975). Because their approaches are so
similar, Samir Amin's analysis of the systematic, global
character of underdevelopment and the choices it presents
to scores of Third World countries is of particular interest.
These are excerpts from one of his recent articles. *

The diagram below sums up the difference between a
self-centered system and a peripheral one:

Central determining relationsinip

2 4

'mass' consumption of capital

exports consumption luxury goods goods

i 3

Main peripheral -dependent relationstitp

The economic system is divided into four sectors which
may be considered both from the point of view of
production and from the point of view of distribution of
the active population engaged in the above-mentioned
productive activities.
SELF-CENTERED SYSTEM

The determining relationship in a self-centered system is
that which links sector 2 (the production of 'mass'
consumption goods) with sector 4 {the production of
capital goods intended for the production of sector 2).

* Samir Amin, "Accumulation and Development: A Theoretical
Model," Review of African Political Economy, No. 1 (August-
Novemberl 1974.

This determining relationship has been the characteristic
feature of the historical development of capitalism at the
center of the system (in Europe, North America and
Japan). . . . The level of development of the productive
forces is expressed through the social division of labor: The
division of the labor force, in suitable proportions, between
sectors 2 and 4 . . .

PERIPHERAL MODEL

The model of capital accumulation and economic and
social development at the periphery of the world system is
not in any way related to the one we have examined above.

In the periphery the process began when under an
impulse from the center, an export sector was created. This
was to play a determining role in the creation and shaping
of the market. We shall not get very far by repeating ad
nauseum the platitude that the products exported by the
periphery are mineral or agricultural primary products.
These are obviously products in which a given region of the
periphery has a particular natural advantage (abundant
supply of ore or tropical products). The underlying reason
which rendered possible the creation of this export sector
must be sought in the conditions which make the
establishment 'profitable.' . . . The reason for creating an
export sector therefore lies in obtaining from the periphery
products which are the basic elements of constant capital
(ravt/ material) or of variable capital (food products) at
production costs lower than those at the center for similar
products (or obviously of substitutes in the case of specific
products such as coffee or tea).

This is therefore the framework for the essential theory
of unequal exchange. The products exported by the
periphery are important to the extent that—ceteris paribus,
meaning equal productivity— the return to labor will be less
than what it is at the center. And it can be less to the
extent that society will, by' every means— economic and
non-economic, be made subject to this new function, i.e.,
providing cheap lab©r to the export sector. ... [Ojnce
society is subjected to this new function— becoming in this
sense dependent— it loses its traditional character since it is
not the function of real, traditional societies (i.e.,
pre-capitalist) to supply cheap labor for capitalism. . . .

18

INDOCHIIMA CHRONICLE

to invest. Their incomes are used for the consumption of
imported goods.

Tlius, no or^e taltes the initiative in technical progress. It is
not surprising that the Khmer economy has remained just as it
was at the time of Angkor.

The Question of foreign investments then arises and, in so
much as they exist, why they have been unable to contribute
to development. This is the subject to which we now turn.
2. Generalization of Capitalist Networks after Penetration of

Foreign Capital

a) Private Investment. The exact amount of private foreign
investment in Cambodia is difficult to estimate . In 1954, the
French High Commissioner's Office evaluated the "capital
investment of major enterprises to date" at about 2,975 billion
piasters ($85 billion).

This figure is suspect given the circumstances of the period:
In 1954, there was great political uncertainty and firms

Underdeveiopmenf-

Changing of the guard. 135? photo
- by Wilfred Burahett,

Under these conditions the domestic market, born out
of the development of the export sector, will be limited and
distorted. The smailness of the internal market explains the
fact that the periphery attracts only a limited amount of
capital from the center although it offers a better return.
... In addition, the methods used to ensure a low return to
labor correspond with a strengthening of the various
parasitic internal social classes which serve as conveyor-
belts; latifundists in some places, Kulaks in others,
comprador commercial bourgeoisies, state bureaucracies,
etc. The internal market is thus mainly based on the
demand for 'luxury goods' from these social classes. . . .

From the 'social' point of view, this model leads to a
specific phenomenon; the marginalization of the masses. By
this we mean a series of mechanisms heterogeneous in
nature which impoverish the masses: proletarianization of
small agricultural producers and cottage industry workers,
rural semi-proletarianization and impoverishment without
proletarianization of peasants organized in village communi-
ties, urbanization and massive increase in urban unemploy-
ment and underemployment, etc. Unemployment in this
case differs from unemployment under the central model of
development. Underemployment, in general, will have the
tendency to increase instead of being relatively limited and
stable, cyclical variations apart. Unemployment and
underemployment thus have a role different from that

under the central model; the high level of unemployment
ensures a minimum wage rate which is relatively rigid and
frozen both in sectors 1 and 3; wage does not emerge both
as a cost and an income which creates a demand, vital to
the model, but on the coritrary only as a cost, demand itself
originating elsewhere; from abroad or out of the income of
the privileged social classes. ..."

The analysis thus bririgs us back to the fundamental
question: development for whom? To the extent that we
regard development as meaningful ,only in so far as it
integrates the masses and serves their interest, the model of
dependent peripheral capital accumulation is a dead end. A
strategy of development for the masses should adopt as its

initial basis a fundamental review of priorities with regard
to the allocation of resources, which presupposes a
rejection of the assumptions of profitability within the
system. . . .

The changeover from the peripheral model (based on
sectors 1-3), to the model of real, autonomous, self-
centered development (based on sectors 2-4) constitutes the
essential element of transition. , , .

Since England was the birthplace of industrial capital-
ism, all other developed countries have at some stage been
'backward' in comparison with it. But none of these
countries had ever been peripheral in the sense that we have
defined it. Gradually the Continent and North America
caught up, and in the case of the USA and Germany,
overtook England in ways largely analogous to those of the
English model. . . .

Now, this road is barred to the countries of the present
periphery precisely because of the advanced development
of marginalization, the considerable and increasing gap
between the modern technology set up by ruling capital
and the necessity for an immediate improvement in the
conditions of the masses, etc. These are the alternatives:
either dependent development according to the model
above, or self-centered development, necessarily original in
comparison to those countries already developed. It is in
this direction that we discover the law of unequal
development of civilizations. The periphery is forced to
transcend the capitalist model (even if it is state capitalism).
It cannot catch up with it. . . .

Seen in this light, the concrete strategies of transition
appear above all as those of self-reliance. Self-reliance,
which must be understood on different levels, and which
must democratically respect the true popular social groups
which constitute the nation: the village, the region, . . , the
state and, eventually, groups of states. The level of
development attained may force one country for a time to
consider only the most elementary levels of concrete,
transition strategies so that transition must be seen in very
long perspective. It is within this framework that we place
the question of 'small countries.'

September- November 1976

19

^

*®-^ )/^j^<ii

BfWltR 1 i*rmm\

j4d oncf cartoon from 19? 2 issue of Khmer
Republic, offioial organ of Lon Not regiim.

operating in Indochina could have overestimated the value of
their plants in the hope of making a profit out of a possible
withdrawal. However, to the extent that these investments
were made, why were they unable to contribute to the
development of capitalism in Cambodia? The reason is that the
multiple effects of investment are destroyed (1) by the export
of profits, (2) by the transfer of the locus of the accelerator*
outside of the economy.

Let us examine these phenomena in turn.

(^ Export of Profits

In a country where capital resources are hardly used, even a
moderately more intensive use results in a relatively large

* The "accelerator" refers to the way increasing consumer demand for
products leads manufacturers to make major investments in new
production equipment, tools, buildings, etc, thus spreading the original
increase in demand. —Eds.

The Sc'issor-

140

130

120

110

100

90

80

70

60

1

Till
Wholesale orice

1

1 /

^

%

^,

it

idex fo
nportec

r

'

^^

f"^

—7

\

s

11

i »

1

—

\

\

S-.l V

J

Wh

olesaie
ndex f(
colonic

price-^

-^

«-•*

/.

1

\

J

goods

\

^

/

1926 27 28 29 30 31 32 33 34 35 36 37 38

Source: From data in the Annuaire Stat'atiQue de I'indochine

These curves are extremely eloquent. Note that,

1) the "scissor" only begins to open in 1930, and

2) from 1930, it continually opens wider and wider.*
This tends to confirm that disequilibrium is latent from the
time of the "great crash" and can only secondarily be
blamed on war damage.

1$ it necessary to point out the absence of any
improvement in the terms of exchange since 1938 and that,
on the contrary, deterioration is only more pronounced
when increasingly acute competition from synthetic rubber
aggravates the permanent factors already cited?

Khieu Samphan

* The "scissor" refers to the graphic image produced when the
prices Cambodia must pay for imported goods rise relative to prices
it receives for goods it exports. —Eds.

increase in production and subsequently, in saving. This, then,
provides the basis for significant "secondary" investment. The
real multiplier effect* of productive investment should not be
confused with the simple artificial inflation in demand
emanating from unproductive investment {commerce, ad-
ministrative and military expenditures) where artificially
created purchasing power is lost in fruitless price increases. In
the situation of internatior^al integration, howauer, the
multiplier effect from even productive investment isymulled
because the profits made are .not reinvested lo^y but
exported. .■ ■ ; ',, ' .

* The "multiplier effect" refers to the normal recycling of/Tncome
through the economy, where one person's expenditure Jpecpmes
another person's income, which is then expended, etc. —Eds.

20

INDOCHINA CHRONICLE

It is difficult to speculate on the amount of profits
exported eacli year before 1954 because Cambodia was
dissolved in "L'Union Indochinoise." For the years after 1954,
if earnings pressing through legal channels as recorded in the
balance of payments are scrutinized, we observe that 381
million riels ($10.9 million) were exported in 1957. This sum
includes earnings from 1955-56 which could not be transferred
until 1957 as a result of difficulties related to the liquidation
of the quadripartite monetary union and the establishment of
a new monetary system. Earnings exported annually by legal
channels therefore equal about 190 million rieis ($5.4 million).
These statistics underestimate the total amount of annual
earnings exported, as it is necessary to count locally reinvested
earnings twice: first as exported profits, and then as newly
imported capital that subsequently generates supplemental
earnings for export. We will return to this point later. Certain
value transfers are concealed by the pricing policy of foreign
firms inside the country. All sorts of manipulations are
possible due to extreme concentration of commercial and
financial relations with foreign markets. For example, the
equivalent of some 300 million riels (S8.6 million) transferred
from Cambodia to foreign markets are, in fact, handled by two
or three foreign banks inside the country. Export and import
of goods thus allows exchange operations on a grand scale.
Importers and exporters declare the value of their goods to
customs and the exchange office. The exchange operations
required for payment are executed on the basis of these
declarations. . . . [Since fraud is difficult to detect] , foreign
currency is easily acquired by padding the cost declared for
imported products and by undervaluing the price declared for
exported products. An average fraud of five percent on the
value of all commercial transactions in 1956 would amount to
210 million riels ($6 million). In reality, much more than this
could easily be exported each year.

Earnings exported in this way might well be close to 400
million riels per year ($11.4 million), more than six percent of
the national income. Figures of this order are considerable.
They suggest, contrary to some opinions, that total net saving
in the country is equal to if not greater than that in developed
countries in percentage terms (though certainly not in absolute
terms). Without this considerable leakage, development of the
country might well proceed at least as rapidly as that of
European countries.

The effects of the export of earnings must be measured
against total profits made in the country, for profit is the
essential source of finance for investments in a capitalist
regime. Exported earnings represent at least 40 percent of
gross profits made in the country by foreign and national
coppanies. Therefore, these exports are a considerable drain
on*, 'the Khmer economy and curb its developmental
momentum in the extreme.

2, Transfer Abroad of the Accelerator Effect

The accelerator effect can be initiated as a result of demand
for capital or intermediary goods;

a. Aflarge portion of foreign investment is used to acquire
capital ^pods in the country of origin. The accelerator effect
induceQ^y this demand is, therefore, transferred abroad; it has
eby contributed to the generalization of capitalist
. inside Cambodia. Paul Bernard illustrates these points
J noting that barely half of the 8 billion francs of public
vate capital invested in Indochina between the wars was
distributed within the country.

AViiitr:

-. 4*

^

€ss6

^y ?■

r. vfjMJir^ .,ji'

mm

K^f

Route S, 1968.

Photo by Steve Cagan

September-November 1976

21

On tills point Cambodia cannot delude itself. In the course
of its industrialization, it will need to import capital goods for
a long time, perhaps indefinitely.*

The deleterious effect of the transfer of the accelerator
effect can be estimated if it is recalled that Cambodian
industry experiences only an incomplete cycle of development
and imports its spare parts, chemicals, lubricants, fuels and
even materials for processing (see Table 1, page14-). Import of
these capital goods, spare parts and intermediary goods
amounts to the integral transfer abroad of the locus of the
accelerator induced by the demand for these goods,

b. To the extent that foreign and national investments
channel cash incomes to indigenous laborers, this should
enhance the development of merchant economy. Indeed, this
did happen. "Primary" cash incomes generated local demand
for foodstuffs or handicrafts which encouraged local producers
to become merchants, that is, to produce more and more in
order to "setl." From this "primary" income, it was therefore
possible to create an internal market, a current of autonomous
internal exchange.

Whenever income distributed inside the country results in a
demand for imported goods, and since foreign goods are
relatively cheap, this occurs frequently in a situation of
international integration, the locus of the accelerator process is
transferred abroad. Foreign investment does not become a
pole of development; it attracts neither additional foreign
investment nor local investment. When foreign profits are
re-invested on the spot, the second flows of capital cannot be
attributed to the first. There is only repetition of autonomous
flows of foreign investment lacking induced effects. This is
why we believe it is necessary to count re-invested earnings in
two distinct ways: first as re-exported earnings and again as
newly imported capital.

Moreover, it becomes clear that once the flow of foreign
investment ends, so does growth. There is no induced national
capital formation capable of taking up the slack. This is what
happened in Cambodia.

b. Public Investment. To facilitate the integration of
Khmer economy into that of the metropole, a public
development program was essential. According to estimates by
the Bank of Indochina, public investments up to 1939 for all
of Indochina amounted to 14.162 billion francs (1939 francs).
These were allocated in the following way:

50% for railway construction

25% for military installations

1 1% for agricultural irrigation

14% for the Post Office, maritime ports, public building
and roads.

It is difficult to say exactly what share of this investment
went to Cambodia. Development work there basically
consisted of 300 kilometers of railway; 3,300 kilometers of
roads, including 1,090 kilometers with asphalt surfaces and
2,143 kilometers of gravel roads; basic furnishings for the post
office and for Phnom Penh's river port. No seaport was built.
Furthermore, no important irrigation projects were under-
taken during this period. Cambodia's share of these public
investments was probably one-fifth of the total or about 2.8
billion (1939) francs.

Bananas for Phnom Penh,

* See Indochina Chronicle no.
19. -Eds.

47, February/March 1976, pp. 14 and

A Consisfenf View

Radio announcements by the new Cambodian govern-
ment in the first months after the liberation of Phnom Penh
reflected the consistency over the years of Khieu
Samphan's analysis of the basic economic problems facing
his country— and the key role it played in the economic
development strategies of the movement he leads. On June
11, 1975, Phnom Penh radio declared: "The old and new
aggressors have caused the weakness of our country. If
there had been no foreign attacks, Cambodia would have
become a powerful country." The broadcast accused
France of having prevented the development of weaving
and handicraft industries during its 90-year control of the
country. It went on to blame Japan and the U.S. for similar
harm done to the economy, saying that the old and new
colonialists "wanted to keep our country in a colonial
situation. They stole our raw materials to ship them to their
own countries," The broadcast accused the developed
countries of bringing their own goods to Cambodia to
compete with local products.

Contradicting Western press reports that the new
government would enforce a radical return to a traditional
peasant society, Phnom Penh radio announced as early as
May 9, 1975 that: "Our people do not seek to produce
only rice, but also to produce goods for industrial
use— cotton, rubber, textile fibers. Our soldiers, our people,
our workers, our youth and our monks believe we can
develop our industry and economy in a short space of
time." '^

Compiled from Bz\i\6r% news service

22

INDOCHINA CHRONICLE

To what extent did these investments contribute to the
generalization of capitalist circuits in Khmer economy? The
co-efficient of generalization of capitalist or merchant circuits
was reduced by several intervening factors:

(1) As in the case of private investments, a large portion of
the Indochinese loans was used in the metropole to acquire
capital goods.

(2) The distribution of tocat incomes issuing from public
investment was considerably reduced by use of the large
"corvie."* The incomes obtained by European or indigenous
administrators, a large portion of the monies distributed, were
spent on the import of consumer goods and did not affect
demand for local agricultural products, the only type of
demand that might have contributed to the generalization of
internal exchange.

(3} Although Cambodia no longer pays for interest and
repayments on metropolitan loans to finance public invest-
ments, this has not always been the case. Thus, of the 825
million piasters spent between 1900 and 1937 on public works
in all of Indochina, the Indochinese budget had to pay 575
million, partly as a direct local contribution and above all, in
arrears on and repayment of metropolitan loans. These levies
and taxes fell mostly on indigenous peoples. The rigorous
fiscal regime falling on the indigenous populations discouraged
any capitalist inclinations on one level (this was especially the
case with patents, taxes on commerce, taxes for validating
weights and measures) and on another, threw the peasants into
the hands of grasping businessmen and money lenders, the
invaluable accessories of foreign import-export businesses.

In the final analysts, therefore, public investment had a
very limited effect upon the generalization of merchant
networks.

(4) All of the preceding considerations are nonetheless
insufficient explanations of why public investment failed to
develop capitalist networks in Cambodia. The principal and

' Corvee is the use of forced labor for the construction of public works.
-Eds. _

permanent reason, in our view, lies in the fact that these
investments were made under terms imposed by economic
intergation into world trade. Leaving aside military and
political development, these investments mostly financed an
economic infrastructure of railways and roads. In an
independent, non-integrated national economy, roads, rail-
ways, bridges and ports contribute to the expansion of internal
exchange between and among villages and towns within the
country, and in so doing, they enlarge a national market and
facilitate autonomous, national capitalism. In contrast, in the
present state of economic integration into advanced capitalist
economies {freedom of external trade), investments in
infrastructure, regardless of secondary conditions attaching to
them, can only facilitate still greater penetration of foreign
industrial goods, allowing them to compete in the last nooks in
the countryside left to national handicrafts, and then facilitate
the extraction of Cambodian agricultural produce to meet the
needs for raw materials of these same industries. In a word,
investment intensifies international integration which, as we
have already seen, is the root cause of underdevelopment of
the Khmer economy.

Examination of the annual railroad statistics shows that 80
percent of the transported tonnage was made up of imported
manufactured goods or agricultural goods (rice) destined for
export. Internal exchange among the various Khmer provinces
along the rail line represented, at most, only 20 percent of the
total traffic. These percentages reveal the traditional structure
of rail transport. The accounts also give a general sketch of
road and river transport in Cambodia which is altogether
diffeicnt from the situation in advanced capitalist countries
such as that in France, for example, where at least 80 percent
of the merchandise transported internally is for autonomous,
internal exchange, between several towns or among regions of
the country. In Cambodia, each communication channel has
essentially two opposing streams of traffic (export of
agricultural products, import of manufactured goods and
foodstuffs) that only come together by way of capitalist

Pottery and other arafts remained in artisan workshops.

September-November 1976

countries.

Under the present terms of international integration,
investments made in the area of infrastructure only favor
export-import activities to the exclusion of any autonomous,
internal exchange. This is also the case, more recently, vt^ith
American investments in this area.

In conclusion, therefore, the multiplication effects of
private foreign capital are very weak and cannot compensate
for the opposing effects of international integration. Public
foreign investments tend to reinforce this integration because
they are directed into infrastructure.

At the present time, the effect of American aid is not
fundamentally different.

C. AMERICAN AID AND THE
' STRENGTHENING OF JNTERNATIONAL
INTEGRATION

1. Investments

example, which we borrow from the person in charge of the
Khmer economy, Monseigneur, the Prince Norodom Sihanouk,
need be cited:

Suppose, in fact, that foreign aid were cut or abruptly
reduced by substantial proportions. We would then have
insurmountable difficulties in meeting our obligations to
the personnel of our army and would be threatened with
social disorder: non-payment of salaries, difficulties with
re-integrating commissioned soldiers into civilian sectors.

Our budget could not underwrite the cost of the cars,
lodgings and fine food required by officers and soldiers
accustomed to "great comfort." And this army, trans-
formed into an easy living caste, would no longer relate to
our little people who lead simple and frugal lives.

As for difficulties with our neighbours, these would
nonetheless remain. Our American friends habitually say tO"
us: "We can't choose sides between two friends or judge
them" . . .

Of the total 172.2 million U.S. aid dollars allocated in the
program for the years 1955-56-57, SS112.9 million, or 66
percent of the total, was military aid. This tends to expose the
"aid" program as more a part of the U.S. "security" program
than aid for Cambodia's economic development. The point
seems all the more evident when it is remembered that our two
neighbors who benefit in addition from the active sympathy of
the United States use their "aid" in arms and planes to
provoke multiple border incidents.

This military aid, far from solving the country's security
problem, contains the seeds of grave difficulties. Only one

Rj-

lance of

Tr

Qa

□ ae

IMPORTS

EXPORTS

(millions of rielsj

1953

1,492

1,937

1954

1,750

2,188

1955

1,665

1,402

1956

1,980

1,282

1957

2,043

1,811

1958

2.670

1,852

1959

2,447

2,104

1960

3,322

2,441

1961

3,396

2,220

1962

3,583

1,903

1963

3,751

3,116

1964

2,863

3,367

1965

3,603

3,690

1966

3,888

2,356

1967

■ 3,365

2,907

1968

4,043

3,098

1969

4,202

2,729

1970

2,893

2,125

1971

4.191

827

1972

, 12,158

1,204

1973

19,871

675

Source: United

Nations Yearbook

of

Internationa! Trade

Statistics. 1974

Is it necessary to point out that this eventuality restricts a
country's political options''

Let us now turn to U.S. economic and lechincal aid.
This is therefore reduced to S59.3 million. Where does, it 'go?
The, following table gives the distribution of allocated fOnds in
thousands of U.S. dollars:*

•"Resume exercise 5&-57," (fom L'mde americame au Cambodge,
brochure published by the American Aid Mission in Phnom Penh, p. 11 .

Transport . .- . ...... . .• 31 ,853

Agriculture and Natural Resources 6,717

Education 6,864

Hygiene and Purification 3,715

Miscellaneous 2,990

Public Administration 2,445

Industry and Mining . , :- 2,206

Urban Development and Housing 1,045

TOTAL 56,835

(56%)
(12%)
(11%)
( 7%)
( 5%)
( 4%)
( 3%)
( 2%)
100%

24

INDOCHINA CHRONICLE

As we see, infrastructure absorbs the most (56 percent). In
principle, it is good for Cambodia to have ports, roads and an
airport, but we have already seen that infrastructure doesn't
foster autonomous national development in the case of
international integration. . . .

[American aid does not encourage the Khmer national
economy. Sugar refineries, textile mills and other national
production facilities capable of meeting all the needs of the
country are operating far below capacity due to competition
from imported goods.]

. . . Other goods imported under the rubric of American aid
come in as publicity samples to raise demand for luxury goods
and to nourish the "demonstration effect" of Duesin-
berry-Nurkse, that is, to encourage the desire of a particular
part of Khmer society to imitate the American way of life. As
a result of this aid, artificial circuits emerge in support of the
import of non-essential goods. This is especially the case for
automobiles, motors and accessories ($3.8 million, or 6.6
percent of total aid), electrical appliances {refrigerators, radios,
etc.: $2.3 million, or close to 4 percent of total aid). All of
these durable consumer goods embody future import needs of
complementary goods: gasoline, accessories and spare parts.

This aid cannot fail to affect the orientation of Cambodia's
foreign trade. During 1946-54, the U.S. share of the value of
Cambodia's foreign trade was thus 11 percent. For 1955-57,
Customs and Excise accounts revealed that the U.S. share of
Cambodia's foreign trade was 12.3 percent, representing 7.46
percent of Cambodia's total imports and 17.24 percent of its
exports. But these figures neglect goods of American origin
purchased in Hong Kong, Singapore, South Viet Nam,
Thailand, and Indonesia (whose petroleum products belong to
Caltex). The Hong Kong share of Cambodia's imports is 21.9
percent; South Viet Nam's, 13 percent; Indonesia's' 5 percent;
Thailand and Formosa's, 3 percent. Finally, America's ally
Japan takes a 15 percent share of Khmer imports. Together
these countries supply 52.9 percent of Khmer imports. A large
percentage of the goods are of American origin or come from
subsidiaries of large American firms set up in these countries.
If all of these considerations were taken into account,
American exports to Cambodia would be at least 40 percent of
the total value of all Khmer imports and not 7.46 percent, as it
might first appear.

Apart from that, French exports which made up about 60
percent of the value of Cambodia's imports before 1954 fall to
only 20 percent. There is, therefore, a clear withdrawal from a
pole of "domination."

, -It seems quite clear that American aid is not the kind which
allows development of the economy, On the contrary, it tends
to intensify its integration into the world market dominated
by the United States, integration which is at the very root of
present underdevelopment. Consequently, the small percen-

tage of aid given over to development of agriculture, natural
resources, industry, education, hygiene, and urban develop-
ment would appear to be window dressing designed to ease the
passage of integration rather than demonstration of a desire to
aid the economy.

At the end of this first chapter, we can, therefore, conclude
that Cambodia's economy is a backward agricultural one
where two different sectors coexist, an atrophied capitalist
sector and a predominant precapitalist sector, both being in
addition integrated into foreign capitalism through the channel
of foreign trade. The pole of "domination" is shifting away
from France and moving closer to the United States. The
International Cooperation Administration in Phnom Penh
which distributes American aid credits has become a magnet
even more powerful than the Bank of Indochina. . . .

Conclusion

The Necessity of Autonomous Development

The task of industrializing Cambodia would appear above
all else to require a prior, fundamental decision: development
within the framework of international integration, that is,
within the framework of free external trade, or autonomous
development.

International integration has apparently erected rigid
restrictions on the economic development of the country.
Under the circumstances, electing to continue development
within the framework of international integration means
submitting to the mechanism whereby handicrafts withered
away, precapitalist structure was strengthened and economic
life was geared in one-sided fashion to export production and
hyperactive intermediary trade. Put another way, agreeing to
international integration means accepting the mechanism of
structural adjustment of the now underdeveloped country to
requirements of dominant, developed economies. Accepting
international integration amounts to accepting the mechanism
by which structural disequilibrium deepens, creating instability
that could lead to violent upheaval if it should become
intolerable for an increasingly large portion of the population.
Indeed, there is already consciousness of the contradictions
embodied in world market integration of the economy.

Self-conscious, autonomous development is therefore
objectively necessary. . . .

September-November 1976

25

Important Events In Recent Cambodian History-

1945 France regains control over its colony, which had been
proclaimed independent under Japanese auspices. King
Sihanouk refuses to sign a modus-vivendi agreement
with France, demanding increased self-government.

1946 Franco-Khmer accord makes Cambodia an
"autonomous state within the French Union" while
France retains veto power over important areas of
policy.

1949 France grants Cambodia legal independence but retains
control of police and army.

1950 U.S. establishes diplomatic relations with Cambodia.
Nationalist insurgency increases as critics attack
Sihanouk's gradualist approach to independence.

1951 Democratic Party, calling for immediate independence,
wins overwhelming electoral victory. Struggle between
king and parliament.

1952 Sihanouk dissolves Democratic government as national-
ist and communist anti-government activity increases.

1953 Sihanouk makes world tour to publicize Cambodia's
desire for complete independence, goes into exile
vowing to lead a "holy war for independence."
Non-communist nationalists take up arms against
French. France grants total independence to prevent
two-front war in Indochina.

1954 Geneva Conference on Indochina calls for removal of
Vietminb forces from Cambodia. U.S. and South Viet
Nam refuse to sign final accord, and John Foster Duties
begins negotiations for anticommunist SEATO treaty.
U.S. provides military and economic aid to Cambodia.

1955 Sihanouk announces Cambodia will conduct neutral
foreign policy. Sihanouk abdicates throne to run in
national election; his party wins overwhelmingly. At
Bandung Conference, Sihanouk agrees on peaceful
coexistence with China, renounces SEATO "protection"
of Cambodia,

1956 Thailand and South Viet Nam impose economic
blockade in retaliation for Cambodian aid agreement
with China. U.S. suspends aid.

1958 South Vietnamese army units invade Cambodia border
areas. U.S. refuses request to restrain Saigon, Cambodia
proposes diplomatic relations with China, U.S. organizes
anti-Sihanouk Khmer Serei movement with help of
Thailand and South Viet Nam.

1960 National referendum supports Sihanouk's policies.

1962 Sihanouk calls for new Geneva Conference to extend
international protection to Cambodia.

1963 Khmer Serei activities increase. Sihanouk cancels U.S.
aid agreements. Pentagon calls for direct intervention in
Cambodia.

1964 U.S. and Cambodia open talks in New Delhi. U.S. offers
to support Cambodian neutrality if Cambodia excludes
NLF and DRV forces from its territory.

1965 Cambodia severs diplomatic relations with U.S. in
protest against US-ARVN border violations.

1966 U.S. voices support for Cambodian neutrality, charges
abuse by Hanoi and NLF. Rightwing opponents of
Sihanouk win parliamentary elections; Lon Nol becomes
prime minister.

1967 Leftist demonstrations in the countryside and Phnom
Penh topple Lon Nol cabinet. Cambodian army moves
against communist insurgents. Khmer Rouge organiza-

tion forms as leftists are forced underground. Sihanouk

refuses U.S. request for talks on use of Cambodian '
territory by Vietnamese NLF and PLA troops.

1968 Chester Bowles mission to Cambodia ttireatens U.S.
invasion to attack Vietnamese forces. Sihanouk gives
tacit consent t< "hot pursuit." Sihanouk accuses
Cambodian communists of fomenting civil war in
northwest.

1969 Rightist opposition, including Khmer Serei, surrender to
Sihanouk, are absorbed into army and police. Sihanouk
offers to restore relations with U.S. in exchange for
recognition of territorial integrity. U.S. agrees, while its
planes bomb border regions. Sihanouk announces new
Lon Nol cabinet will reexamine U.S. economic aid
question. Lon Nol's government dismantles Sihanouk's
economic program by removing restrictions on banking
and commerce.

1970 Cambodian army begins to attack Vietnamese bases in
Cambodia. Sihanouk ousted in Lon Nol coup. U.S.
recognizes new government while Sihanouk plans
government-in-exile, Lon Nol announces willingness to
accept U.S. military aid. China supports Sihanouk's
exile government and resistance movement. Joint
U.S. -Vietnamese attacks to "clean out" communist
bases in Cambodia. More than 50,000 U.S.ARVN
troops involved. U.S. -South Vietnamese naval blockade
of Cambodia. Lon Nol declares martial law while U.S.
begins military aid. Lon Nol establishes a republic.
Sihanouk publicly hopes for revolutionary victory even
though it will end his political role. Claims NUFK
controls two-thirds of Cambodian territory. U.S. Senate
approves $255 million aid for Cambodia.

1971 U.S. air war in Cambodia escalates, Saigon increases its
forces there. U.S. finances Vietnamese Cambodian
operations. Phnom Penh population, swollen with
refugees, reported to have doubled in first year since
Lon Nol coup. U.S. announces promising off-shore oil
areas in Southeast Asia. Guerrillas take offensive.
Intellectuals increasingly join the insurgency while
students demonstrate in Phnom Penh for reforms.

1973 U.S. Congress halts U.S. bombing in Cambodia (after
more than 539,000 tons have been dropped) but allows
military aid to continue. Lon Nol government controls
only cities and major waterways, but war goes on,
causing destruction and suffering throughout the
country.

1974 Khmer Rouge forces enter final stage of war, gradually
tightening noose around Phnom Penh. Phnom Penh
swollen with refugees who depend on imported rice for
food. Starvation and disease spread.

1975 Final victory for Khmer Rouge force's who liberate
Phnom Penh April 17. Ad residents evacuated to
countryside in emergency measure to prevent starvation.
Khieu Samphan becomes first deputy premier as
political, economic and social reorganization of the
country begins.

1976 New constitution adopted in January, renaming country
Democratic State of Kampuchea. People's Representa-
tive Assembly elected March 20. Sihanouk resigns as
head of state, Khieu Samphan elected President. At
Non-Aligned Nations Summit Conference in Colombo,
Khieu Samphan reaffirms Kampuchea's commitment to
independence and non-alignment.

26

INDOCHINA CHRONICLE

Conferences

The National Council for Universal and Unconditional
Amnesty (NCUUA) and FRIENDSHiPMENT have joined
together to organize working conferences on the issues of
amnesty and postwar reconstruction aid to Viet Narn. The
conferences are being held this fall in five cities across the
country; the first one was held September 18 in Los
Aftgeles, the second in San Francisco October 9.

Organizers of the conferences hope that they will result
in unified regional strategies which will help to influence
the postwar policy of a newly elected administration. Your
participation is essential.

For more information, contact NCUUA/FR I END-
SHIPMENT, 235 E. 49th St., New York. NY 10017.
212-688-8097 or 212-486-0580.

Schedule:

Atlanta/KY, W VA, TN, NC, MISS, AL, GA SC, FLA region

October 23

Contact: Jay Lamday 404-881 -6660 (o) or

404-237-7 146(h)

Washington D.C./M id-Atlantic region

October 30

Contact: Bea Robbins, 301-622-0229

Oklahoma City/Colo., KS, Ml, NM.OK, ARK, TX, LA

region
October 30-31
Contact: Don Parker, 405-521-0416

Boston/New England region

November 6

Contact: Anita Greenbaum, 617-332-9072

Washington (specific site undetermined )/W A, OR, ID, MT,

WY region
early November
Contact; Merlin Rainwater. 206-632-0500

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m^^^^^j^i^-UM.lJL-MJAM^^

, S^ 2oi(r^oIfl29^c:^»iJu^«2f^<»^«'2.*2*o*:.»* '*£»Z9gL'i^tiZ.'> s^Z^Z f^o^o^cS t z< jCc^Ec ^^ gz '■jj^o J«> J t*^* jo^ojgojg

Issue No. 51-52

Published by the Indochina Resource Center, Berkeley, California September-November 1976

Eewly oormrissioned jumping station in Pumat province^ northwest of Fhnom Fenh^ can pump
30^000 aubia meters of wat&r a day. Suoh pumping stations^ which supply water to farmland^
are part of the new government's effort to increase agricultural productivity. WA photo.

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